Latin tax reform linked to low-carbon development

The urgent need to close equality gaps in Latin America and the Caribbean should be complemented by the imperative of attaining low-carbon sustainable development.

That was the view expressed by the executive secretary of the Economic Commission for Latin America and the Caribbean. She is Alicia Bárcena and she was speaking this week in Germany.

Public finances in Latin America have a chronic weakness that is reflected in a low tax burden (combined with high levels of tax evasion and avoidance), a regressive tax structure and a heavy dependence on a specific resource for tax collection (copper, oil, agricultural and livestock exports), she said. Diverse demands compete for public resources, producing constant tension among the different options of public spending, according to the head of the commission, a U.N. agency.
Ms. Bárcena stated that for Latin America, green fiscal reform “is a serious challenge but also a new opportunity to combine the establishment of solid fiscal foundations with environmental preservation, as long as this can be adequately combined with greater investment in critical areas such as infrastructure, which could generate decent jobs with environmental sustainability. This will depend, undoubtedly, on financing, investment and technological innovation”.

“A better design of public finances that may expand the margins for environmental security as well as for attaining the imperative of social welfare requires using the opportunities of taxation in sectors such as energy, transportation, urban development and infrastructure in general,” she said.

This undertaking faces the political challenge of taxation, she added, which has to do with interest groups and privileged economic groups in a high-carbon development path.

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